SYDNEY—South32 Ltd., the mining company spun out of BHP Billiton Ltd. last year, said it would take around US$1.7 billion in charge against its assets as the pain from slumping prices of commodities including nickel and coal continues to spread.

South32 said it is also seeking to slash costs at operations including its Cerro Matoso nickel mine and smelter in northern Colombia and its Australian coal, alumina and manganese operations to protect profits. However, the company stopped short of shuttering a troubled manganese operation in South Africa permanently in response to the global commodity price rout.

Around 620 workers will be laid off at the South African arm of Samancor Manganese, a joint venture between South32 and Anglo American PLC, the company said. Samancor Manganese is the world's largest producer of manganese, largely used in the making of steel and aluminum, and has operations in South Africa and Australia.

South32 and Anglo agreed to halt mining at the Hotazel manganese mines in South Africa in November in response to low commodity prices, a move that removed around 700,000 metric tons of manganese ore from global supply.

On Thursday, South32 said mining would restart at the South African arm of Samancor Manganese but at a substantially lower rate. Management said the Hotazel mines would operate at around 900,000 tons below peak output for the foreseeable future.

"When combined with the restructuring initiatives that are currently being finalized at many operations across our portfolio, we expect to further strengthen our financial position and increase our cash generating capacity through the cycle," Graham Kerr, South32's Chief Executive, said.

Shares in South32 have been falling since it listed last May in one of the largest corporate breakups in mining history. The stock closed at 95 Australian cents (US$0.68) on Wednesday, versus its debut value of A$2.13 a share.

Last August, the miner said it aimed to cut annual costs by US$350 million or more by mid-2018. It also projected it would reduce its capital expenditure this fiscal year through June by 9% to US$700 million.

Write to David Winning at david.winning@wsj.com

 

(END) Dow Jones Newswires

February 03, 2016 21:35 ET (02:35 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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